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STAMFORD, Conn., April 12, 2018

Hyperscale Cloud Providers to Increase Market Dominance

The worldwide public cloud services market is projected to grow 21.4 percent in 2018 to total $186.4 billion, up from $153.5 billion in 2017, according to Gartner, Inc.

The fastest-growing segment of the market is cloud system infrastructure services (infrastructure as a service or IaaS), which is forecast to grow 35.9 percent in 2018 to reach $40.8 billion (see Table 1).

Gartner expects the top 10 providers to account for nearly 70 percent of the IaaS market by 2021, up from 50 percent in 2016.

"The increasing dominance of the hyperscale IaaS providers creates both enormous opportunities and challenges for end users and other market participants," said Sid Nag, research director at Gartner.

"While it enables efficiencies and cost benefits, organizations need to be cautious about IaaS providers potentially gaining unchecked influence over customers and the market. In response to multicloud adoption trends, organizations will increasingly demand a simpler way to move workloads, applications and data across cloud providers' IaaS offerings without penalties."

Table 1. Worldwide Public Cloud Service Revenue Forecast (Billions of U.S. Dollars)

2017

2018

2019

2020

2021

Cloud Business Process Services (BPaaS)

42.6

46.4

50.1

54.1

58.4

Cloud Application Infrastructure Services (PaaS)

11.9

15.0

18.6

22.7

27.3

Cloud Application Services (SaaS)

60.2

73.6

87.2

101.9

117.1

Cloud Management and Security Services

8.7

10.5

12.3

14.1

16.1

Cloud System Infrastructure Services (IaaS)

30.0

40.8

52.9

67.4

83.5

Total Market

153.5

186.4

221.1

260.2

302.5

BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service
Note: Totals may not add up due to rounding.
Source: Gartner (April 2018)

Software as a service (SaaS) remains the largest segment of the cloud market, with revenue expected to grow 22.2 percent to reach $73.6 billion in 2018. Gartner expects SaaS to reach 45 percent of total application software spending by 2021.

"In many areas, SaaS has become the preferred delivery model," said Mr. Nag. "Now SaaS users are increasingly demanding more purpose-built offerings engineered to deliver specific business outcomes."

Within the platform as a service (PaaS) category, the fastest-growing segment is database platform as a service (dbPaaS), expected to reach almost $10 billion by 2021. Hyperscale cloud providers are increasing the range of services they offer to include dbPaaS.

"Although these large vendors have different strengths, and customers generally feel comfortable that they will be able to meet their current and future needs, other dbPaaS offerings may be good choices for organizations looking to avoid lock-in," said Mr. Nag.

Although public cloud revenue is growing more strongly than initially forecast, Gartner still expects growth rates to stabilize from 2018 onward, reflecting the increasingly mainstream status and maturity that public cloud services will gain within a wider IT spending mix.

This forecast excludes cloud advertising, which was removed from Gartner's public cloud service forecast segments in 2017.

Gartner analysts will provide additional analysis on data center and IT operations trends at the Gartner global IT Infrastructure & Operations events April 3-4 in Sao Paulo, April 25-27 in Tokyo, April 30-May 1 in Sydney, May 8-9 in Mumbai, May 15-17 in Orlando, June 5-6 in Frankfurt, and June 26-27 in Mexico City. Follow news and updates from these events on Twitter using #GartnerIO.

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